S&P must feel as if it just can't do anything right when it comes to rating the U.S. debt.

Financial markets and investors largely ignored Standard & Poor's when it downgraded U.S. debt in August 2011 in the wake of Congress and the White House narrowly averting a debt ceiling crisis by enacting the Budget Control Act. In fact, in spite of S&P's new assessment that they weren't as good an investment, interest rates went down rather than up as Wall Street did what it typically does in the face of increased uncertainty: It bought more Treasuries.

And with interest rates falling and their constituents' personal finances unaffected, members of Congress ignored the downgrade.

In other words, the S&P action had virtually no impact. The only thing that took a hit was S&P's own corporate reputation.

Not much, in my opinion. In my last post, I argued that I'd take the debt deal even at the expense of the negative publicity we got for the juvenile way the negotiations were conducted. So we avoided default and got downgraded by S&P anyway. S&P's arithmetic mistake aside, I don't think potential investors in U.S. Treasuries relied too much on its previous AAA rating in actively valuing the bonds and bills. And even if they did, they should be only minimally bothered by its current AA+ rating. Potential investors have plenty of public information on current and projected cash flows of the U.S. government. In those circumstances, there is little value added by a ratings agency's grade.

Where ratings agencies can add value is in rating securities that are harder to value. I cannot say it better than E.J. Dionne did: